Guidance on insurance requirements and liabilities under the Space Industry Act 2018 - CAP 2218

 
Guidance on insurance requirements and liabilities under the Space Industry Act 2018 - CAP 2218
Guidance on insurance requirements and liabilities
under the Space Industry Act 2018

CAP 2218
Guidance on insurance requirements and liabilities under the Space Industry Act 2018 - CAP 2218
Published by the Civil Aviation Authority, 2021

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29 July 2021

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Guidance on insurance requirements and liabilities under the Space Industry Act 2018 - CAP 2218
CAP 2218                          Guidance on insurance requirements and liabilities under the Space Industry Act 2018

   Contents
   Section 1: Overview of the Guidance ..................................................................................................... 4
      What is the purpose of this document? ............................................................................................. 4
      What are the liability and insurance requirements for in-orbit operations and procuring a launch?
       ............................................................................................................................................................ 5
      In-orbit operations.............................................................................................................................. 5
      Procuring a launch .............................................................................................................................. 6
      General ............................................................................................................................................... 6
      Who is this guidance for? ................................................................................................................... 6
      Using this guidance ............................................................................................................................. 6
      The regulator ...................................................................................................................................... 6
      Key terms ............................................................................................................................................ 7
      Carrying out spaceflight activities at sea ............................................................................................ 9
      Requirements and expectations ......................................................................................................... 9
      Types of licence .................................................................................................................................. 9
      Examples of offences and enforcement directions under the Act ................................................... 11
      The full list of guidance documents issued in relation to the Act .................................................... 12
   Section 2: Legislative Background ........................................................................................................ 13
      The Space Industry Act 2018 ............................................................................................................ 13
      Liabilities provisions.......................................................................................................................... 13
      Insurance provisions ......................................................................................................................... 13
      Powers to limit operator liability ...................................................................................................... 13
      Cases in which a limit will be disapplied ........................................................................................... 14
      Regulator liability .............................................................................................................................. 14
      The Space Industry Regulations 2021 and provisions on liabilities .................................................. 14
      Commencement of the Act .............................................................................................................. 15
   Section 3: The insurance and liabilities provisions in the Space Industry Act 2018 ............................. 16
      Background ....................................................................................................................................... 16
      What are the liabilities provisions in the Space Industry Act 2018? ................................................ 16
      Who do sections 12(2) and sections 34 to 38 apply to – who is an operator? ................................ 17
      Liabilities and insurance requirements for spaceports and range control service providers .......... 17
      Provisions in the Act to limit operator liabilities .............................................................................. 18
   Section 4: Overview of insurance requirements in licence conditions ................................................ 19
      Proposed licence conditions ............................................................................................................. 19
      Requirement to hold third-party liability insurance ......................................................................... 19

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Guidance on insurance requirements and liabilities under the Space Industry Act 2018 - CAP 2218
CAP 2218                         Guidance on insurance requirements and liabilities under the Space Industry Act 2018

      Length of cover required .................................................................................................................. 20
      Defining ‘launch’ and ‘in-orbit phase’ for the purposes of insurance .............................................. 22
      Insurance requirements for end-of-life and re-entry of UK licensed space objects ........................ 22
      Provision of insurance documents ................................................................................................... 22
      Other types of insurance .................................................................................................................. 22
      What are the terms applied to insurance policies? .......................................................................... 23
      Which legal jurisdiction in the UK will apply?................................................................................... 23
   Section 5: Limiting operator liabilities .................................................................................................. 24
      Cases in which an operator’s limit of liability will be disapplied ...................................................... 24
      Limiting operator liability in cases where there is more than one launching state ......................... 24
      Persons who do not have a strict liability right of claim .................................................................. 24
   Section 6: Calculating a Modelled Insurance Requirement (MIR) and the licensing process .............. 28
      Overview ........................................................................................................................................... 28
      The MIR process ............................................................................................................................... 28
      Elements covered and financial values to be used in setting the insurance requirement .............. 29
      Launch ............................................................................................................................................... 29
      Launch operations MIR calculation .................................................................................................. 30
      Licensing process and timing of determination of the MIR amount ................................................ 30
   Section 7: Conditions in licences relating to insurance and liability .................................................... 31
      Overview ........................................................................................................................................... 31
      Examples of conditions in licences relating to insurance ................................................................. 32
   Section 8: Baseline requirements for third party liability insurance policies ....................................... 35
      Type of TPL insurance policy required covering multiple launches annually ................................... 35
      Regulation of insurance policies and markets and rating of insurers .............................................. 35
      Market regulation ............................................................................................................................. 35
      Market security and financial ratings ............................................................................................... 35
   Section 9: Documents to be submitted to the regulator ..................................................................... 36
      At application .................................................................................................................................... 36
      Insurance renewal ............................................................................................................................ 37
   Section 10: Additional insurance considerations for launch operations and associated activities ..... 38
      Sub-orbital operations ...................................................................................................................... 38
      Spaceport operations ....................................................................................................................... 39
      Types of insurance that operators may consider taking out ............................................................ 39
      Range control operations ................................................................................................................. 40
      Types of insurance that operators may consider taking out ............................................................ 40

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Guidance on insurance requirements and liabilities under the Space Industry Act 2018 - CAP 2218
CAP 2218                         Guidance on insurance requirements and liabilities under the Space Industry Act 2018

      Sea launch ......................................................................................................................................... 40
   Section 11: Cross waivers of liability .................................................................................................... 40
   Section 12: Waiver of insurance requirements (Space Industry Act 2018 and Outer Space Act
   1986)43 ................................................................................................................................................ 41
      Requirements for applying for a waiver ........................................................................................... 41
   Section 13: Use of securities and other alternatives to insurance ....................................................... 41
   Section 14: How to make a claim ......................................................................................................... 43
   Annex A: Terms used in this guidance .................................................................................................. 44

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CAP 2218                  Guidance on insurance requirements and liabilities under the Space Industry Act 2018

   Section 1: Overview of the Guidance

   All applicants and licensees should note that the liabilities and insurance requirements will be
   specific to each licence. Any examples provided here should be considered as illustrative only. We
   would encourage potential applicants to engage as early as possible with the regulator to discuss the
   potential scope of liabilities. Applicants should also note that the Government is carrying out a
   review of insurance and liabilities requirements and that therefore this guidance may be subject to
   change.

   1.1      The Space Industry Act 2018 (the Act) regulates all spaceflight activities carried out in the
            United Kingdom, and associated activities.

   1.2      The Act requires any person or organisation wishing to:
                • launch a launch vehicle from the UK
                • return a launch vehicle launched elsewhere than the UK to the UK landmass or the
                    UK’s territorial waters
                • operate a satellite from the UK
                • conduct sub-orbital activities from the UK
                • operate a spaceport in the UK, or
                • provide range control services from the UK

            to obtain the relevant licence.

   1.3      It is supported by The Space Industry Regulations 2021 (the Regulations), that set out in more
            detail the requirements for each licence, and the Regulator’s Licensing Rules, which specify
            which application form to use to apply for a licence and what information the regulator will
            require in support of an application.

   1.4      There is then a series of guidance documents designed to help explain how to comply with the
            Act and the Regulations. This document is one of the guidance documents.

   With the coming into force of section 1(3) of the Act, the Outer Space Act 1986 no longer applies to
   space activities carried on in the United Kingdom, and accordingly the Outer Space Act 1986 does not
   apply to a person or organisation wishing to carry out spaceflight activities or operate a spaceport in
   the United Kingdom. The Outer Space Act 1986 will continue to regulate the following activities
   carried out overseas by UK entities: the procurement of the overseas launch of a space object,
   whether such procurement is carried out within the UK or overseas; the operation of a satellite in
   orbit from an overseas facility by a UK entity. Extant licences granted under the Outer Space Act
   1986 for the carrying out of space activities from within the UK will continue to be governed under
   that regime. Where an application for a licence has been made under the Outer Space Act 1986, it
   will be assessed under that Act and – where successful – will result in the award of a licence under
   the Outer Space Act 1986.

   What is the purpose of this document?
   1.5      This guidance explains the liabilities and insurance requirements that will be placed on
            organisations that conduct spaceflight activities in the UK.

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CAP 2218                  Guidance on insurance requirements and liabilities under the Space Industry Act 2018

   1.6      This guidance covers insurance requirements and liabilities for spaceflight activities launched
            from the UK as covered by the Space Industry Act 2018 and the Space Industry Regulations.
            This guidance focuses on the requirements for third-party liability insurance for launch
            activities and how the regulator will calculate the insurance requirement using the Modelled
            Insurance Requirement (MIR) approach. This guidance also sets out the UK Government’s
            approach to limiting an operator’s third-party liability and who is not able to make a strict
            liability right of claim. 1

   1.7      This guidance provides further detail on the licensing process and other aspects of insurance
            and liabilities which will be of interest to all licensees and applicants.

   What are the liability and insurance requirements for in-orbit operations and
   procuring a launch?

   In-orbit operations
   1.8      The approach to setting insurance amounts and limits of liability for in-orbit operations for
            satellites launched from or operated from the UK and licensed under the Act will mirror the
            current policy adopted for licences issued under the Outer Space Act 1986 (as amended). This
            will apply to in-orbit activities. Under this approach, the regulator will determine whether a
            mission is a standard mission, or a higher risk mission.
              • Standard missions represent very low and well-characterised third-party risks. For
                   licensing purposes, the regulator defines a standard mission as a mission involving a
                   single satellite employing an established launcher, a proven satellite platform, and
                   recognised operational practices.
              • A standard mission will require a € 60 million indemnity limit. The regulator will in most
                   cases require that a standard mission is covered by a € 60 million ‘any one occurrence’
                   third-party liability insurance policy. The regulator may also allow for an operator to
                   place all satellites that count as ‘standard missions’ onto a single ‘any one occurrence’
                   insurance policy.
              • For higher risk missions, the regulator may set the liability limit and insurance amount at
                   a higher level. It can do this where the mission is: o     novel in nature or scale, and /
                   or
                   o        uses techniques, technologies and / or systems which are unproven, and
                   / or o presents a higher risk of high-value third-party liability (TPL) claims and /
                   or o     presents TPL risks that are not well-characterised

   1.9 The waiver of insurance will also apply in the same way as currently under the Outer Space Act
         1986.

   1Strict liability – Under section 34(2) of the Act, an operator is strictly liable for injury or damage caused in the
   UK to people or their property on land, territorial waters or in relation to an aircraft in flight or persons and
   property on board such an aircraft as a result of spaceflight activity. This means that a person sustaining injury
   or damage does not have to prove the operator was at fault to obtain compensation and become involved in
   complex litigation. A full list of those who do not have a strict liability right of claim is included in regulation
   218.

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   Procuring a launch
   1.10 Orbital licensee liability for the launch phase will be set at the same amount as the limit of
         liability of the launch licensee.

   For details of insurance under the Outer Space Act 1986, read the guidance on How to get a licence
   to launch or operate a satellite, or manage other activities in outer space, under the Outer Space Act
   1986.

   General
   1.11 This guidance provides applicants and licensees with details of:
             • the amount and duration of cover required
             • who needs to take out the insurance
             • who and what needs to be covered
             • how the insurance requirement for a launch is calculated under the MIR
             • operator responsibilities, including requirements for the provision of insurance
                documentation to the regulator
             • the limiting of operators’ third-party liability and
             • cases in which a limit will be disapplied

   Who is this guidance for?
   1.12 This guidance is for any organisation that wishes to apply for a launch operator, return operator
         or orbital operator licence under the Act.

   1.13 The guidance will also be of relevance to applicants for a spaceport or range control licence.

   Using this guidance
   1.14 The guidance should be read in conjunction with sections 34-38 of the Act and the Space
         Industry Regulations 2020.

   1.15 If applicants have any queries, they are encouraged to contact the regulator to seek clarification
          or gain further information.

   The regulator
   1.16 The Civil Aviation Authority (CAA) will perform the functions of the regulator under the Act. It is
         referred to in this guidance as ‘the regulator’. Under section 2 of the Act, the regulator must
         carry out its functions relating to spaceflight activities with a view to securing the health and
         safety of members of the public and the safety of their property. This duty has primacy over
         the other matters that the regulator must take into account in exercising its functions.

   1.17 In performing its functions, the regulator will need at times to review confidential and
          commercially sensitive information. The regulator already has robust security processes in
          place that will ensure all the information sent in relation to applications, and monitoring
          ongoing licensed activities, is handled and protected appropriately. For more details on the
          regulator’s security processes and systems, please contact the regulator.

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   Contacting the regulator
   The regulator can be contacted by email to commercialspaceflight@caa.co.uk. The regulator
   welcomes and encourages ongoing contact from prospective applicants before they submit an
   application for a licence. This can be from the earliest stages of considering whether to apply for a
   licence.

   Key terms
   1.18 The Act regulates:
            • space activities.
            • sub-orbital activities and
            • associated activities

            that are carried out in the UK.

   1.19 As set out in section 1 of the Act, “space activity” means
             (a) launching or procuring the launch or the return to earth of a space object or of an
                 aircraft carrying a space object
             (b) operating a space object, or
             (c) any activity in outer space

   1.20 “A space object” includes the component parts of a space object, its launch vehicle and the
        component parts of that.

   1.21 “Sub-orbital activity” means launching, procuring the launch of, operating or procuring the
        return to earth of:
           (a)        a rocket or other craft that is capable of operating above the stratosphere
           (b)        a balloon that is capable of reaching the stratosphere carrying crew or
           passengers, or (c) an aircraft carrying such a craft

            but does not include space activity. By way of clarification, the regulator will use the
            International Standard Atmosphere (47km) as the stratopause (i.e. the upper limit of the
            stratosphere) for the purposes of determining whether an activity is ‘sub-orbital’.

   1.22 Space activities and sub-orbital activities are referred to in the Act as “spaceflight activities”.

   1.23 “Spacecraft” means a space object, a rocket or other craft that is capable of operating above
        the stratosphere or a balloon that is capable of reaching the stratosphere carrying crew or
        passengers, that is used for spaceflight activities. It includes satellites.

   1.24 “Launch” is defined in the Act as including causing a craft to take off (or releasing a balloon).

   1.25 Regulation 2 of the Space Industry Regulations defines a launch vehicle, other than in
        references to a “US launch vehicle”, as:
           “(a) a craft to which section 1(5) of the Act applies and the component parts of that craft,
               or
           (b) a space object which is a vehicle and the component parts of that vehicle,

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             that is used for the purpose of the proposed spaceflight activities or the operator’s
             spaceflight activities, as applicable, but does not include a payload carried by the launch
             vehicle;”

   1.26 The “craft to which section 1(5) of the act applies” referred to in part (a) of this definition are:
      •    a rocket or other craft that is capable of operating above the stratosphere
      •    a balloon that is capable of reaching the stratosphere carrying crew or passengers

   1.27 Part (b) of the definition covers vehicles that are capable of reaching orbit, such as those used
        to place a satellite payload in orbit. As explained below, the operator of any satellite carried
        on board a launch vehicle does not require their own launch operator licence, but does
        require an orbital operator licence.

   1.28 Associated activities include the operation of spaceports and range control functions.

   1.29 Under the Act, any site from which a spacecraft or carrier aircraft is intended to launch is
        considered a spaceport and must be licensed. A site at which controlled and planned landings
        of spacecraft are to take place is also a spaceport and must be licensed. Further information
        on sea launch can be found in section 10 below.

   1.30 Range control services are defined in section 6 of the Act as:
           “(a) identifying an appropriate range for particular spaceflight activities;
           (b) co-ordinating arrangements for the activation and operation of the range;
           (c) obtaining all necessary information for identifying the range and for co-ordinating its
               activation and operation;
           (d) ensuring that notifications are issued for the protection of persons who might be put at
               risk by spacecraft or carrier aircraft within the range or in the vicinity of it;
           (e) monitoring the range, and the spacecraft or carrier aircraft for which it is provided, to
               ascertain
               (i) whether the restrictions or exclusions to which the range is subject are complied
                    with;
               (ii) whether planned trajectories are adhered to;
           (f) communicating any failure to comply with those restrictions or exclusions, or to adhere
               to those trajectories, for the purpose of enabling any appropriate actions to be taken in
               response;
           (g) any prescribed services provided for the purposes of, or in connection with, services
               within any of paragraphs (a) to (f).”

   1.31 Under section 13(1) of the Act, the regulator has the power to include conditions in an operator
         licence (launch operator licence, return operator licence and orbital operator licence),
         spaceport licence and a range control licence. Licensees must comply with those conditions.
         Schedule 1 of the Act includes a list of examples of conditions, but this is not exhaustive, and
         the actual conditions included in a licence will vary depending on the operation planned and
         the type of licence issued. When deciding what conditions to include in a licence, the regulator
         must consult the public bodies, including the Health and Safety Executive, listed in section
         13(6) of the Act. Whenever the guidance refers to the regulator imposing conditions (other

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            than a condition which the regulator is required to impose via the Regulations under section
            13(3)), the obligation to consult these bodies applies.

   Carrying out spaceflight activities at sea
   1.32 If a person is proposing to launch or carry out other spaceflight activities from UK territorial
          waters or from a UK flagged ship elsewhere, the Act and Regulations will regulate the
          activities. A regulation referring to land also applies, if appropriate, to spaceflight activities
          from a ship. For example, if appropriate, reference to a "place” or "other place” from which
          activities take place has been added to a regulation which refers only to activities from land. If
          a person is proposing to launch or carry out other spaceflight activities from a foreign flagged
          ship outside UK territorial waters and is a British national, UK body corporate or Scottish firm,
          the Outer Space Act 1986 regulates these activities.

   1.33 Sea launch and other sea activities are a complex area; organisations wishing to conduct sea
         launches are advised to contact the regulator before applying for a licence. Further
         information on this can be found in section 2 of the guidance document Applying for a licence
         under the Space Industry Act 2018.

   Requirements and expectations
   1.34 Where the guidance uses the term “must”, this refers to a requirement in or under the Act. If
         applicants / licensees fail to meet that requirement, it could result in the licence not being
         granted or being revoked or suspended. Where it is stated that “the regulator expects”
         applicants to do something, this describes a preferred approach; however, it is not a legal
         requirement to comply with the regulator’s expectations.

   Types of licence
   1.35 The Act refers to three types of licences that can be awarded:
            • operator licence
            • spaceport licence
            • range control licence

   1.36 Following the publication of the Act, it was agreed that there should be different licensing
         requirements for different types of operators. For example, some organisations that would
         want to operate space objects (such as satellites or research vehicles) would not have a launch
         capability, and instead would wish to procure such capability and then operate the object
         once it reached orbit. While these organisations clearly do not need a licence to operate a
         launch vehicle, they are still required to obtain an operator licence to operate their object in
         space. Reflecting the various circumstances, there are now five licences available:

               • Launch operator licence: means an operator licence within section 3 of the Act which
                 authorises a person or organisation to carry out spaceflight activities that include
                 launching a launch vehicle or launching a carrier aircraft and a launch vehicle. This is the
                 type of licence needed if a person or organisation wants to launch a launch vehicle or
                 use a carrier aircraft to assist with a launch of a launch vehicle. A person or organisation

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                  holding a launch operator licence is referred to as a spaceflight operator, 2 or in some
                  circumstances, launch operator licensee. If a launch operator licensee wishes to return a
                  launch vehicle launched from the UK or the UK’s territorial waters to land in the UK, it
                  can apply to do so under the launch operator licence and does not need to apply for a
                  separate return operator licence.

              • Return operator licence: means an operator licence within section 3 of the Act which is
                not a launch operator licence and which authorises a person or organisation to operate
                a launch vehicle, launched into orbit from elsewhere than the United Kingdom, in order
                to cause that vehicle to land in the United Kingdom. This is the type of licence needed if
                a person or organisation wants to return a launch vehicle, launched elsewhere than the
                United Kingdom, to land in the UK or within the UK’s territorial waters. A person or
                organisation holding a return operator licence is referred to as a spaceflight operator,1
                or in some circumstances, return operator licensee.

              • Orbital operator licence: means an operator licence which authorises a person or
                organisation to procure the launch of a space object into orbit, operate a space object
                in orbit or conduct other activity in outer space. The most common example of activities
                that would be licensed under an orbital operator licence are the procurement of a
                satellite launch and the operation of a satellite. However, the licence may also cover
                any other activity in outer space, and is not limited to activities in Earth’s orbit. For
                example, an orbital operator licence would be needed for missions in lunar orbit, lunar
                surface missions, or deep space probes. A person or organisation holding an orbital
                operator licence is referred to as an orbital operator licensee.

              • Spaceport licence: means a licence granted under section 3 of the Act authorising a
                person or organisation to operate a spaceport (i.e. a site from which spacecraft or
                carrier aircraft can be launched or a site at which controlled and planned landings of
                spacecraft can take place3). Spaceports can be licensed for vertical or horizontal
                launches (or potentially both). A horizontal spaceport must be located at an aerodrome
                that is already CAA licensed or certified, and National Aviation Security Programme
                (NASP) directed. A person or organisation holding a spaceport licence is referred to as a
                spaceport licensee.

              • Range control licence: means a licence granted under section 7 of the Act authorising a
                person or organisation to carry out range control services in relation to spaceflight
                activities. That includes identifying an appropriate range; coordinating the use of a
                range; issuing protective notifications and monitoring the range. A person or
                organisation holding a range control licence is referred to as a range control licensee.

   2 The term spaceflight operator is used in the Regulations to refer to both the holder of a launch operator licence and the
   holder of a return operator licence. Any references to spaceflight operator in the Regulations or guidance encompass both
   licence types, so any requirements for spaceflight operators are applicable to both launch operator licensees and return

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   operator licensees. Where a requirement only applies to either a launch operator licensee or return operator licensee, this
   is clearly stated.

   3Ships used for sea launch or landing are not “sites” and are therefore not spaceports for the purposes of section 3 of the
   Act and so do not need a spaceport licence. However, certain types of installations at sea may be regarded as a “site or
   “other place” and so come within the definition. A person who wants to launch from, or land at, an installation at sea
   should contact the regulator to find out whether the installation they propose to use requires a spaceport licence.
   Examples of offences and enforcement directions under the Act
   1.37 Under section 3 of the Act, it is an offence to carry out spaceflight activities or operate a
         spaceport in the UK without the required licence. It is also an offence to make a false
         statement for the purpose of obtaining an operator licence or a spaceport licence. A person
         who commits an offence under this section of the Act may be liable to a fine or imprisonment
         for a term not exceeding 2 years, or both.

   1.38 Under section 7 of the Act, it is an offence for range control services to be provided by anyone
         other than the Secretary of State, or a person or organisation authorised to provide them by a
         range control licence. It is also an offence for a person to make a false statement for the
         purpose of obtaining a range control licence. A person who commits an offence under this
         section of the Act may be liable to a fine or imprisonment for a term not exceeding 2 years, or
         both.

   1.39 Under section 13 of the Act, the regulator can grant a licence subject to conditions it thinks
         appropriate or must include a licence condition if required to do so by a regulation (see
         regulations 9(5) and 10(2)). When a condition is imposed, it is an offence for a licensee to fail
         to comply with that condition.

   1.40 Under section 17 of the Act, it is an offence for a spaceflight operator to allow any person to
         take part in spaceflight activities without them having given their informed consent and
         fulfilling the age and mental capacity criteria referred to in Part 12 of the Regulations. Under
         section 18 of the Act, it is an offence a licensee to allow any unqualified individual to take part
         in activities authorised by the licence or work in a specified role.

   1.41 Under section 27 of the Act, the regulator can also issue directions that enable effective
         enforcement action to be taken, where it appears to the regulator that a person is carrying out
         spaceflight activities or associated activities without a licence, in contravention of licence
         conditions or in contravention of the Act or rules made under it.

   1.42 Under section 27(2), “the regulator may give any directions to that person that appear
         necessary to be in the interests of safety or for the purposes of securing compliance with– (a)
         the conditions of a licence,
            (b) provisions contained in or made under this Act, or
            (c) the international obligations of the United Kingdom.”

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   1.43 It is an offence for a person in receipt of a section 27 direction to fail to comply with it (see
        section 31(3)(a) of the Act). The regulator could also, if it wished to do so, enforce compliance
        by way of an injunction or equivalent (see section 31(4)).

   1.44 There are further direction-making powers in the Act, including power for the Secretary of
        State to give directions under section 28(3)-(4) and section 29(1).

   The full list of guidance documents issued in relation to the Act

   1.45 The following guidance documents are available in relation to licences that can be granted
         under the Act (and any statutory instruments made under the Act):
             • Applying for a licence under the Space Industry Act 2018
             • Guidance for launch operator and return operator licence applicants and licensees
             • Guidance for spaceport licence applicants and licensees
             • Guidance for range control licence applicants and licensees
             • Guidance for orbital operator licence applicants and licensees
             • Guidance for the assessment of environmental effects
             • Guidance on security matters for applicants and licensees
             • Guidance on the investigation of spaceflight accidents
             • Guidance on appealing decisions made under the Space Industry Act 2018 and the
                Outer Space Act 1967
             • Guidance on insurance requirements and liabilities under the Space Industry Act 2018
             • Guidance on duties for all licensees under the Space Industry Act 2018 including
                monitoring and enforcement by the regulator

   1.46 In addition, applicants and licensees must follow the Regulator’s Licensing Rules and are advised
          to read the Principles and guidelines for the spaceflight regulator in assessing ALARP and
          acceptable risk.

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   Section 2: Legislative Background

   The Space Industry Act 2018
   2.1      As set out above, the Act regulates all spaceflight activities (which includes space activities and
            sub-orbital activities) and associated activities carried out in the United Kingdom.

   2.2      It requires any person or organisation wishing to undertake such activities to obtain the
            relevant licence.

   2.3      The Outer Space Act 1986 still applies to activities taking place overseas by UK entities. For
            example, if a UK satellite manufacturer procured a launch for its satellite from the UK, it would
            have to do so under the Space Industry Act 2018. If the same manufacturer procured a launch
            for its satellite from any other country, it would have to do so under the Outer Space Act
            1986.

   Liability and insurance provisions in the Space Industry Act 2018
   Liabilities provisions
   2.4 Section 34 of the Act places a strict liability on an operator carrying out spaceflight activities in
           the UK. This means that third parties in the UK suffering injury or damage can bring a claim
           against an operator without having to prove fault.

   2.5      This section also contains a power to make regulations that set out the individuals who are
            taking part in, or who are connected to spaceflight activities, taking place from the UK, who do
            not have a strict liability right of claim against an operator (section 34(3)(a)).

   2.6      Section 36 places a liability on a person carrying out spaceflight activities to indemnify the
            Government or listed person or body for any claims brought against them for loss or damage
            caused by those activities. This is in line with requirements under the Outer Space Act 1986.

   Insurance provisions
   2.7      Section 38 of the Act covers provisions relating to insurance. It is not currently intended to
            make regulations under this section. Instead, insurance requirements under the Act will be set
            out in licence conditions.

   Powers to limit operator liability
   2.8      Section 12(2) of the Act contains a power for the regulator to limit an operator’s liability to
            indemnify the UK Government (as required by section 36) in a licence term. Regulations are
            not needed to provide for limits on an operator’s liability to indemnify Government.

   2.9      Section 34(5) of the Act contains a power to limit the amount of an operator’s liability to third
            parties which is sustained by prescribed persons or in prescribed circumstances.

   2.10 All licences issued under the Space Industry Act 2018 will contain a limit of operator liability with
         respect to claims made under both section 34 and section 36 of the Act.

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   Cases in which a limit will be disapplied
   2.11 Section 35(5)(b) of the Act allows regulations to be developed which identify specific cases or
         circumstances in which the Secretary of State’s power under section 35(2) (to indemnify a
         licensee where a claim exceeds the insurance) or the duty under section 35(3) (to indemnify
         claimants above a liability limit) does not arise. This means that any such regulations can
         prescribe circumstances in which the limit on an operator’s liability to third parties is
         disapplied. It is not currently intended to produce additional regulations under section
         35(5)(a) or section 35(5)(c) (which provide powers to prescribe limits on the amounts that the
         Secretary of State may or must pay under section 35(2) or 35(3)), or make provision
         supplementing section 35(4), which covers the Secretary of State’s participation in
         proceedings.

   2.12 Section 36(3) sets out that the requirement in section 36(1) to indemnify Her Majesty’s
         Government or a person or body listed in section 36(2) is subject to any limit specified under
         section 12(2) on the amount of a licensee’s liability, except in prescribed cases or
         circumstances.

   2.13 Further information can be found below.

   Regulator liability
   2.14 Section 37 of the Act states that the regulator is not liable in respect of spaceflight-related
         actions except in cases of gross negligence or wilful misconduct by the regulator.

   The Space Industry Regulations 2021 and provisions on liabilities
   2.15 Regulations 218 and 219 of the Space Industry Regulations 2021 list the persons who do not
         have a strict liability right of claim under section 34(2) and cases in which the limit of liability
         to indemnify Government under section 36 can be disapplied. Further information on these
         provisions can be found below.

   2.16 In section 34(5) there is a power to make regulations to limit the amount of liability of an
          operator for injury or damage to third parties. This limit must be set out in an operator’s
          licence. It can be restricted to injury and damage sustained by prescribed persons or in
          prescribed circumstances. The limit applies to an operator’s liability to third parties under
          section 34(2) and any other third-party liability not covered by section 34(2). This would cover,
          for example, common law claims made by persons not eligible for the strict liability claim.

   2.17 Regulation 220 provides that an operator licence must specify a limit on the amount of an
         operator’s liability under section 34(2) of the Act and for any third-party liability not covered
         by that section. It also sets out how that limit will be determined, and that it will not apply
         where the operator is liable for gross negligence or wilful misconduct, or where damage or
         loss is caused by non-compliance by the operator with any conditions of its licence or any
         requirements under the Act or regulations made under the Act.

   2.18 Regulation 221 provides that the power or duty of the Secretary of State to indemnify an
         operator for claims above an insurance or liability limit does not apply where the operator is
         liable for gross negligence or wilful misconduct, or where damage or loss is caused by

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            noncompliance by the operator with any conditions of its licence or any requirements under
            the Act or regulations made under the Act.

   2.19 For launching from the UK, the limit of liability and the insurance amount limit will be set at the
         same amount as the Modelled Insurance Requirement in most cases. For the procurement of
         a launch and operating a satellite in orbit, this will follow the existing policy under the Outer
         Space Act 1986.

   2.20 In all cases, the liability limit and insurance amount will be set out in an operator’s licence.

   2.21 The regulator has the right to set out any further requirements on insurance as licence
         conditions (paragraph 35 of Schedule 1 of the Act).

   Commencement of the Act
   2.22 The Space Industry Act 2018 received Royal Assent on 15 March 2020, providing a legislative
         framework for the licensing of space activities, sub-orbital activities, and associated activities
         carried out in the UK. However, many of the Act’s provisions will only come into force on
         [date], when the Space Industry Regulations come into force. From that date, people and
         organisations will be able to apply for a licence to:
            • launch a launch vehicle from the UK for sub-orbital missions involving human
                occupants, or return such a launch vehicle to the UK
            • launch a launch vehicle from the UK for orbital missions that do not involve human
                occupants, or return such a launch vehicle to the UK
            • procure the launch from the UK of a space object (such as a satellite) into orbit
            • operate a satellite from the UK
            • operate a spaceport in the UK, or
            • provide range control services in the UK

   2.23 However, at the point the Regulations come into force, it will not be possible to apply for a
         licence for some activities that are permitted under the Act. These include
             • the licensing of space activities involving an orbital launch vehicle with human
                occupants
             • the licensing of spaceflight activities involving hypersonic (or any other experimental)
                transport from A to B

   2.24 Such activities are technically complex and difficult to regulate. By their very nature, they will
        require global collaboration on common standards to a much higher threshold than is
        achievable with current technologies.

   2.25 These restrictions are set out in Commencement Regulations, which also include provisions to
        ensure that the licensing of a procurement of an overseas launch carried out under the Outer
        Space Act can continue to be done under that Act, whether such a procurement takes place in
        the UK or overseas.

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   Section 3: The insurance and liabilities provisions in the Space Industry Act
   2018

   Background
   3.1 As spaceflight and associated activities come with inherent risk, it is important that those
         suffering damage or loss as a consequence can be compensated.

   3.2      Under the UN space treaties, the UK Government is ultimately liable to pay compensation for
            damage caused by its space objects on the surface of the Earth or in relation to aircraft in
            flight, and liable for damage due to its faults in space. This means that another state suffering
            damage can bring a claim against the UK Government under the UN space treaties. If damage
            occurs on the ground or in relation to aircraft in flight, the liability is absolute, which means
            that the state bringing the claim would not need to prove fault. If the damage occurs in space,
            the liability is fault based.

   What are the liabilities provisions in the Space Industry Act 2018?
   3.3      In line with the provisions in the Outer Space Act 1986, section 36 of the Space Industry Act
            2018 places a liability on a person carrying out spaceflight activities to indemnify the UK
            Government or listed person or body for any claims brought against them for loss or damage
            caused by those activities. The bodies listed in that section 3 are ones that may be carrying out
            functions on behalf of the regulator or will be appointed as a regulator.

   3.4      This indemnity applies to any claims brought against the Government including claims brought
            under the UN Convention on International Liability for Damage Caused by Space Objects (‘the
            Liability Convention’).

   3.5      Section 34 of the Space Industry Act 2018 places a strict liability on an operator carrying out
            spaceflight activities in the UK. This means that third parties in the UK suffering injury or
            damage can bring a claim against an operator without having to prove fault. This provides UK
            nationals with the same rights as foreign nationals.
               • Under section 34(3)(a), the Government can set out in regulations those persons who
                  do not have a strict liability right of claim
               • Section 34(3)(b) sets out that a strict liability claim is not available to a person whose
                  injury or damage was caused or contributed to, by their own negligence

   3.6      This strict liability applies to any injury or damage caused to persons (regardless of
            nationality):
               • in the UK or its territorial waters
               • to an aircraft in flight above the UK or its territorial waters, or • to persons or property
               on board such aircraft

            where the injury or damage is caused by:

   3 These are: (a) an appointed person; (b) the Health and Safety Executive; (c) the Health and Safety Executive for Northern
   Ireland; (d) the Office for Nuclear Regulation; (e) a body or person prescribed under section 21(2); (f) a public authority
   with whom arrangements are made under section 64.

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               • any craft or space object being used by the operator for spaceflight activities
               • anything falling from such a craft or space object
               • any person in such a craft

   3.7      This would include any item jettisoned from the launch vehicle during flight, any debris
            generated as a result of failure and objects returning from orbit and causing injury or damage
            within the UK.

   3.8      Under section 34(1) of the Act, there is no liability in trespass or nuisance in relation to
            spaceflight activities where these are carried out in compliance or substantially in compliance
            with the Act or with requirements and conditions (including licence conditions) imposed by
            the Act or by the regulator.

   3.9      This means that launch operator licensees or orbital operator licensees who are acting lawfully
            cannot be sued by a third party who considers that their right to quiet enjoyment of land is
            being affected.

   Who do sections 12(2) and sections 34 to 38 apply to – who is an operator?
   3.10 The liability and insurance provisions under sections 34 and 36 apply only to persons carrying
         out spaceflight activities in the UK. In general, this will be either a launch operator licensee, a
         return operator licensee or an orbital operator licensee.

   3.11 The liabilities apply to:
             • all licensed operators
             • anyone using a spacecraft or space object in line with an exemption under section 4(4)
                of the Act
             • anyone carrying out spaceflight activities illegally (i.e. without a licence)

   Liabilities and insurance requirements for spaceports and range control service
   providers
   3.12 The Act does not impose a strict liability under section 34 on persons operating spaceports, or
         “other places” (as defined in in paragraph 1.32 of this guidance) or providers of range control
         services or require them to indemnify the Government for claims brought against it. This does
         not, however, prevent anyone from bringing a claim against a person operating a spaceport or
         providing range control services and proving fault (under common law). Furthermore,
         spaceports and range control service providers will need to be covered by insurance when
         spaceflight activities are conducted. In line with usual commercial practice, the UK
         Government would anticipate that the spaceport and range control service provider(s) will be
         named as additional insureds on the insurance policy taken out by the launch operator for a
         specific launch / series of launches.

   3.13 The regulator will also consider licence applications where the insurance for the launch or
         orbital operator is covered under the insurance policy of the spaceport operator.

   3.14 There is no requirement for the spaceport or the range control service provider to take out a
         specific policy themselves, separate to that taken out by the launch operator. The spaceport

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            and range control service provider will not be required as part of licence conditions to be
            covered by TPL insurance outside of the period covered by the launch licence. This includes for
            pre-launch activities. A separate MIR calculation is therefore not needed for spaceports and
            range control service providers.

   Provisions in the Act to limit operator liabilities
   3.15 As set out in section 2 above, the Act contains powers to limit, via regulations and in licence
         conditions, the two types of operator liability identified above.

   3.16 All licences issued under the Space Industry Act 2018 will contain a limit of operator liability with
         respect to claims made under both section 34 and section 36 of the Act.

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   Section 4: Overview of insurance requirements in licence conditions
   4.1      This guidance sets out the Government’s policy on the insurance requirements which will be
            contained in licence conditions. This includes some standard conditions which will apply to all
            spaceflight activities as set out below. However, the regulator may also impose conditions
            relating to insurance requirements on a case-by-case basis. These are described in further
            detail in other parts of this guidance.

   Proposed licence conditions
   4.2      Insurance requirements will be set out in licence conditions. This is in accordance with
            Schedule 1 of the Space Industry Act, which sets out the conditions that may be included in
            licences. Paragraph 35 relates to insurance and states:
                “Conditions requiring insurance or indemnities, including—
                   (a)     conditions requiring liability to third parties to be insured for no less than a
                   specified amount;
                   (b)     conditions as to compliance with requirements imposed by regulations under
                   section 38(1).”

   4.3      This guidance provides additional information to support these conditions and other aspects
            of insurance. Details of the types of licence conditions relating to insurance that could be
            imposed are included in section 7 below.

   4.4      The aim of licence conditions relating to insurance is to ensure that insurance is available to
            cover claims made:
                  • against the UK Government under the Liabilities Convention and therefore that the
                      indemnity to Government is insured
                  • by uninvolved persons in the UK (‘third parties’)
                  • under common law

   4.5      If a licensee does not meet the conditions relating to insurance – or indeed to any other
            licence conditions – the regulator could suspend or revoke the licence. Breach of a licence
            condition is also an offence under section 13(8) of the Act.

   Requirement to hold third-party liability insurance
   4.6      Licensees must demonstrate that they either hold or are able to benefit from third-party
            liability (TPL) insurance for the duration of the licensed activities. The TPL requirements for
            different types of operation are set out below. This will be set out as a licence condition,
            unless a waiver of insurance is granted.

   4.7      Not all parties involved in a particular operation need to take out individual insurance policies.
            In line with common practice, it would be acceptable for only one insurance policy to be in
            place per launch which includes the licensees and UK Government as additional insureds. This
            will usually be taken out by the launch operator. This reduces costs for spaceflight
            participants, prevents unacceptable accumulation of risk for insurers and also makes any
            claims process simpler. However, alternative arrangements may also be permissible and the
            regulator will consider these accordingly.

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   4.8      Orbital operator licensees and other parties to the launch (including spaceport licensees and
            range control service providers) will need to demonstrate that they either hold or are able to
            benefit from TPL insurance (for example, by being named as an additional insured party or by
            utilising insurance taken out by a parent company).

   4.9      Orbital operators would be covered by the launch operator’s insurance policy for any damage
            caused by the satellite during the launch phase. Unplanned re-entry during the in-orbit phase
            of a mission should be covered by existing launch TPL policies (for which liability would be
            limited to the €60m for standard missions as per the current policy). A policy position is yet to
            be determined with respect to insurance requirements for a planned re-entry.

   4.10 The MIR-calculated liability will relate to the launch phase only. 4

   4.11 For launch operator licensees, the TPL insurance must cover the duration of the spaceflight
         activities, as specified in the licence and licence conditions, from and including launch and any
         re-entry activities covered by the licence.

   4.12 For in-orbit operations, orbital operator licensees will need to take out or have access to TPL
         insurance as appropriate to cover the period of in-orbit operations as specified in a licence and
         associated licence conditions. This may include coverage as part of the launch TPL policy, if
         applicable.

   4.13 For sub-orbital launches licensed under the Act where the carrier aircraft is the launch platform,
         launch operator licensees should consider including the carrier aircraft within the TPL policy.
         The Act contains provisions which can limit third-party liability which would be applicable to a
         carrier aircraft.

   4.14 Under existing aviation law, it is not possible to limit liabilities imposed for carrier aircraft in
         relation to passengers taking part in spaceflight activities, if that carrier aircraft is also used for
         air transport purposes i.e. to carry passengers or cargo whilst it is being used for spaceflight
         activities.

   4.15 Spaceport licensees will need to consider whether they would need to hold an aviation liability
         insurance policy to cover third-party liability risk associated with spaceport operations.

   Length of cover required
   4.16 Licensees will be required to hold or have access to TPL cover for the duration of the licensed
          activity until the regulator deems the spaceflight activities to be completed (for example once
          the spacecraft is positioned to the satisfaction of the regulator, has been passivated and has
          been switched off).

   4.17 The requirement will be set out in a licence condition.

   4Operators should note that further work is underway as part of the Government’s review to look at insurance
   requirements for different phases of a mission. This may therefore be subject to change.

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